In VIX Trading

NASDAQ:XIV looks set to continue up trend.

Investors looking for momentum can consider VelocityShares Daily Inverse VIX Short-Term ETN XIV given the explosive year to date performance and continued momentum of US risk markets. The fund recently hit a new 52-week high. Shares of XIV are up approximately 291.85% from its 52-week low of $22.05/share.

XIV

XIV focuses on providing -1x inverse exposure to VIX, Chicago Board Options Exchange (CBOE) Volatility Index. It charges 135 basis points in fees per year and has AUM of $760.92 million. The ETF tracks the SPVXSP index to replicate short term volatility movements in a basket of securities comprising of the nearest 2 months VIX futures.




Why the Move?

The market fear gauge, VIX, has been rallying lately, see earlier article. It hit a record low of 9.37 earlier in the month and is currently drastically under its short term resistance at around 11.80. A bearish view on VIX indicates positive sentiment towards the S&P 500, since the two linked and generally move in opposite directions. The market is currently experiencing the second-longest bull cycle, running more than eight years. Hence, an inverse exposure to the market fear gauge has performed very well over the last 24 months.

NASDAQ:XIV set to continue up trend

NASDAQ:XIV set to continue up trend

Continued Gains?

The following focuses on VIX performance which will drive XIV (Inverse Short Term Volatility Exposure) price movements. The S&P500 VIX Index appears to be in a falling trend; a continued decline within the falling trend can be expected. In addition, the current price action is now close to the bottom of a trend channel which may provide a upward reaction. The VIX currently has support at around 9.40 and resistance just below 18. A strong break through one of these levels would likely indicate a new direction for the index. The index is overall assessed as technically negative for the long term.

 

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